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The zones of discrimination for M-Score is as such:
An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.
During the past 13 years, the highest Beneish M-Score of Quanta Services Inc was -0.61. The lowest was -3.63. And the median was -2.42.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.
The M-Score Variables:
The M-score of Quanta Services Inc for today is based on a combination of the following eight different indices:
|M||=||-4.84||+||0.92 * DSRI||+||0.528 * GMI||+||0.404 * AQI||+||0.892 * SGI||+||0.115 * DEPI|
|=||-4.84||+||0.92 * 0.921||+||0.528 * 1.2339||+||0.404 * 0.8276||+||0.892 * 0.9773||+||0.115 * 0.9042|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8614||+||4.679 * -0.0585||-||0.327 * 1.7086|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $1,621 Mil.|
Revenue was 1899.272 + 1939.438 + 1872.34 + 1886.956 = $7,598 Mil.
Gross Profit was 223.039 + 235.215 + 227.505 + 252.661 = $938 Mil.
Total Current Assets was $2,278 Mil.
Total Assets was $5,214 Mil.
Property, Plant and Equipment(Net PPE) was $1,102 Mil.
Depreciation, Depletion and Amortization(DDA) was $203 Mil.
Selling, General & Admin. Expense(SGA) was $598 Mil.
Total Current Liabilities was $1,204 Mil.
Long-Term Debt was $475 Mil.
Net Income was -5.074 + 216.388 + 46.109 + 53.484 = $311 Mil.
Non Operating Income was -0.567 + -1.07 + -0.448 + -0.212 = $-2 Mil.
Cash Flow from Operations was 201.191 + 110.209 + 117.556 + 189.227 = $618 Mil.
|Accounts Receivable was $1,801 Mil.
Revenue was 2027.614 + 2145.958 + 1838.209 + 1762.574 = $7,774 Mil.
Gross Profit was 311.628 + 336.903 + 264.209 + 272.071 = $1,185 Mil.
Total Current Assets was $2,496 Mil.
Total Assets was $6,254 Mil.
Property, Plant and Equipment(Net PPE) was $1,100 Mil.
Depreciation, Depletion and Amortization(DDA) was $180 Mil.
Selling, General & Admin. Expense(SGA) was $710 Mil.
Total Current Liabilities was $1,106 Mil.
Long-Term Debt was $72 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(1621.133 / 7598.006)||/||(1801.11 / 7774.355)|
2. GMI = Gross Margin Index
Measured as the ratio of gross margin in year t-1 to gross margin in year t.
Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(235.215 / 7774.355)||/||(223.039 / 7598.006)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (2277.519 + 1101.959) / 5213.543)||/||(1 - (2495.704 + 1099.574) / 6253.583)|
4. SGI = Sales Growth Index
Ratio of sales in year t to sales in year t-1.
Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.
5. DEPI = Depreciation Index
Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.
DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.
|DEPI||=||(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))||/||(Depreciation_t / (Depreciaton_t + PPE_t))|
|=||(179.793 / (179.793 + 1099.574))||/||(202.782 / (202.782 + 1101.959))|
6. SGAI = Sales, General and Administrative expenses Index
The ratio of SGA expenses in year t relative to year t-1.
SGA expenses index > 1 means that the company is becoming less efficient in generate sales.
|SGAI||=||(SGA_t / Sales_t)||/||(SGA_t-1 /Sales_t-1)|
|=||(597.638 / 7598.006)||/||(709.919 / 7774.355)|
7. LVGI = Leverage Index
The ratio of total debt to total assets in year t relative to yeat t-1.
An LVGI > 1 indicates an increase$sgai= in leverage
|LVGI||=||((LTD_t + CurrentLiabilities_t) / TotalAssets_t)||/||((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)|
|=||((475.364 + 1203.744) / 5213.543)||/||((72.489 + 1106.311) / 6253.583)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(310.907 - -2.297||-||618.183)||/||5213.543|
An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.
Quanta Services Inc has a M-score of -3.01 suggests that the company will not be a manipulator.
Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations
Quanta Services Inc Annual Data
Quanta Services Inc Quarterly Data